- Alphabet shares take a hit on rumors
- Google could indeed be replaced by Bing as the default search engine on Samsung smartphones
- The shock could be major: Samusng is number 1 in smartphone sales in the world
While Google is in danger of disappearing from Samsung smartphones, the Alphabet stock already seems to be feeling the pinch. Monday, April 17, the price fell by 2.77% from 109.6 dollars to 106.42 dollars. More broadly the action is down more than 4% for the last 5 days after a high of 131.92 dollars.
Investors seem very worried about the competitive environment of Google which is still struggling to respond to Bing and its successful integration of ChatGPT. Integration which could very concretely, in the immediate future, cause him to lose a very lucrative contract with the Korean smartphone seller.
Google could lose its lucrative contract with Samsung
For now, in fact, Google remains the default search engine on Samsung smartphones, first in terms of market share. But discussions are underway to replace Google with its AI-powered competitor Bing. To have the right to offer Google as a default search engine to its customers, Samsung pays Alphabet $3 billion annually.
Between this contract and that of Apple, these agreements still represent a few percent of the group’s annual turnover – the two would be worth together 20 billion dollars per year.
Given the importance of online searches from smartphones (which now represent more than 75% of queries) Google could thus begin to see its market share decrease, and Bing see its own rise, while the search engine Microsoft’s search is actually still very little used on mobile.
According to the New York Times, nothing would be completely stopped for the time being. But it’s hard to ignore Google’s falling behind in AI-powered searches. The firm has tried to oppose its response to Bing Chat, with Bard.
But so far, between its very relative reliability, its poor command of languages other than English and the still closed nature of its access (in beta), Alphabet still fails to reassure investors who increasingly see Bing and Microsoft as a player invested with more potential.
Internally, Alphabet is still working intensively on new approaches. A completely new search engine dubbed in-house Magi is under development. But we still know very little detail about how it works, especially since it is not currently open to the public, even in a restricted way.
The stakes are high for Google, whose main source of income is research. According to StatCounter, Google holds 92% of the global online search market, compared to 2.7% for Bing. Figures that could quickly change if Samsung switches to Microsoft’s side.
Samsung is indeed the world’s leading smartphone seller, with a market share of 21% in the fourth quarter of 2022. Its Galaxy devices are equipped with Google’s Android operating system, but Samsung has also developed its own user interface and its own apps.
